When disposable income rises from Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equal to

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Quizplus · Accepted Answer

MPC (Marginal Propensity to Consume) is calculated as the change in consumption divided by the change in disposable income. Here, the change in consumption is Rs 560 - Rs 470 = Rs 90, and the change in disposable income is Rs 600 - Rs 500 = Rs 100. Therefore, MPC = 90/100 = 0.9.

When Disposable Income Rises from Rs 500 to Rs 600